COST OF LIVING REPORT

Transcription

1 COST OF LIVING REPORT DECEMBER Telecommunications Tracking changes in the cost of living, particularly for vulnerable and disadvantaged Northern Territorians. Northern Territory Council of Social Service

2 About NTCOSS The Northern Territory Council of Social Service (NTCOSS) is a peak body for the Social and Community Sector in the NT and an advocate for social justice on behalf of people and communities in the NT, who may be affected by poverty and disadvantage. NTCOSS is a member of the nationwide Councils of Social Service (COSS) network, made up of each of the state and territory Councils and the national body, the Australian Council of Social Service (ACOSS). The membership of NTCOSS includes community based, not for profit service providers in the social welfare area such as consumer groups, indigenous and mainstream organisations and interested individuals. NTCOSS vision is for A fair, inclusive and sustainable Northern Territory where all individuals and communities can participate in and benefit from all aspects of social, cultural and economic life. NTCOSS mission is To promote an awareness and understanding of social issues throughout the NT community and to strive towards the development of an equitable and just society. NTCOSS receives funding from the NT Government (Department of the Chief Minister). NTCOSS Cost of Living Report - Issue No. 18, November 2017 First published in November 2017 by the Northern Territory Council of Social Service Inc. 2/5 Goyder Rd Parap NT, 0820, Australia (08) admin@ntcoss.org.au Website: Northern Territory Council of Social Service, 2017 This publication is copyright. Apart from fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. Enquiries should be addressed to the Executive Director, Northern Territory Council of Social Service Inc.

3 Introduction...2 SECTION 1 Prices, Living Cost Indexes and Incomes...3 Price Movement in Goods and Services - Impact on Low income Households...3 COMMENT: PETROL PRICES UP AGAIN, AND OTHER PRICE RISES... 4 Selected Living Cost Index (SLCI) for Income Support Recipients...5 HOW WELL ARE INCOME SUPPORT PAYMENTS KEEPING UP WITH COST OF LIVING CHANGES?... 8 STRUGGLING ON NEWSTART AND YOUTH ALLOWANCE WHO IS ON NEWSTART ALLOWANCE? PENSION INDEXATION SYSTEM AND INADEQUACY OF INDEXATION FOR ALLOWANCE PAYMENTS SECTION 2 Telecommunications TELECOMMUNICATIONS: SUMMARY OF KEY ISSUES TELECOMMUNICATIONS: A CRITICAL EXPENDITURE AREA /16 HOUSEHOLD EXPENDITURE SURVEY (HES) - TELECOMMUNICATIONS EXPENDITURE THE SHIFT TO ONLINE AND DIGITAL SERVICES THE REGRESSIVE NATURE OF TELECOMMUNICATIONS EXPENDITURE TELECOMMUNICATIONS PRICE CHANGES INCREASE IN USE OF TELECOMMUNICATIONS (AS PRICES HAVE DECREASED) CHANGES IN TELECOMMUNICATIONS EXPENDITURE IN REAL TERMS (CONSTANT DOLLARS) AFFORDABILITY OF TELECOMMUNICATIONS SERVICES PRE-PAID PLANS AND POVERTY PREMIUMS THE AUSTRALIAN DIGITAL INCLUSION INDEX (ADII) AFFORDABILITY IN THE NT PARTICULAR GROUPS IN THE POPULATION FACING DIGITAL EXCLUSION AUSTRALIAN HOUSEHOLDS WITHOUT HOME INTERNET ACCESS STRUCTURES AND FEATURES OF TELECOMMUNICATIONS SERVICES THE INADEQUACY OF THE CENTRELINK TELEPHONE ALLOWANCE LIMITING OR CEASING TO USE TELECOMMUNICATION SERVICES HIDDEN DISCONNECTIONS THE IMPLICATIONS OF REDUCING USAGE FOR LOW INCOME HOUSEHOLDS BILL SHOCK AND ACCRUAL OF DEBTS DIFFICULTY NEGOTIATION THE MYRIAD OF CHOICES OF TELECOMMUNICATION SERVICES AND PLANS THE NEED TO INCREASE THE AFFORDABILITY OF INTERNET SERVICES PROTECTIONS FOR CONSUMERS OF TELECOMMUNICATIONS SERVICES TELSTRA UNIVERSAL SERVICES OBLIGATION RECOMMENDATIONS APPENDICES Appendix A: CPI Changes, Expenditure Type Darwin vs National over the past quarter and past year EXPLANATORY NOTES CPI AND LIVING COST INDEXES LIMITATIONS OF THE SELECTED LIVING COST INDEXES PENSION AND NEWSTART (AND FAMILY TAX BENEFIT) CALCULATIONS FOR FIGURES 1 AND HOW PENSION RATES ARE ADJUSTED THE CPI AND TELECOMMUNICATIONS CONVERSION OF HISTORICAL HOUSEHOLD EXPENDITURE FIGURES INTO CONSTANT DOLLARS THE AUSTRALIAN DIGITAL INCLUSION INDEX (ADII) THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ACCC) DATA CALCULATIONS USED FOR WEEKLY PAYMENT RATES REFERENCES South Australian Council of Social Service (SACOSS) 2017b, TELECOMMUNICATIONS EXPENDITURE IN AUSTRALIA: Unpublished Data, p Swinburne Institute for Social Research, Centre for Social Impact, Telstra Corporation Ltd, Melbourne, VIC,

4 Introduction This report examines changes in the cost of living over the past quarter and the past year in the Northern Territory, with a particular focus on cost of living pressures for low income, vulnerable and disadvantaged Territorians. The first section of the report focuses on changes in the CPI for Darwin across a range of key expenditure areas over the past year. It is important to note that CPI figures only reflect trends for capital cities and Australia as a whole, and cannot tell us about trends in price movement for states and territories, nor for regional areas. While it is important to look at the movement in the generic All Groups CPI figures, expenditure on the basic essentials makes up the majority of, or even all of, the expenditure items for low income households. It is the price increases in those areas that will have a greater negative impact on some households, and it is these areas that are the focus for NTCOSS in its Cost of Living Reports. The first section of the report also examines the Selected Living Cost Index (SLCI), which is calculated for particular household types, and is done for the country as a whole. The report examines the SLCI figures in the context of income support payment to determine if they are keeping pace with rising living costs. The methodology used for the SLCI is different to that used for the CPI (see also Explanatory Note 1). The Living Cost Indexes (LCIs) have been designed to answer the question: By how much would after tax money incomes need to change to allow households to purchase the same quantity of consumer goods and services that they purchased in the base period? (ABS 2017a). The SLCI s are preferred, as a summary measure, over the more well-known CPI, because the CPI is technically not a cost of living measure, as it tracks changes in the price of a specific basket of goods. However, this basket includes goods and services that are not necessarily part of the expenditure of all households - in particular for many low income households (SACOSS 2014, p.4). The second section of the NTCOSS Cost of Living Report contains a more in-depth analysis of cost of living trends in one key area of concern in relation to cost of living pressures on low income, vulnerable and disadvantaged Northern Territory households. The particular focus of this report is on the cost of telecommunications and uses ABS Household Expenditure Survey Data and September 2017 ABS CPI figures for Darwin, comparing these with national and State/Territory figures. This section of the report also draws on data from the Australian Digital Inclusion Index (ADII), the Australian Competition and Consumer Commission (ACCC), joint research done by the South Australian Council of Social Service (SACOSS) and the Australian Communications and Consumer Action Network (ACCAN), and the Australian Competition and Consumer Commission 2017 (ACCC). 2

5 SECTION 1 Prices, Living Cost Indexes and Incomes Price Movement in Goods and Services - Impact on Low income Households Table 1a: Changes in CPI (All groups) over past year (ending Sept 2017) Darwin vs National Figures Darwin 0.6% vs Australia 0.6% (in last quarter - to Sept 2017) Darwin 0.6% vs Australia 1.8% (over past year - to Sept 2017) Source: ABS 2017d Data 5,6 and ABS 2017e Data 5, 6 Table 1b: Movement in CPI categories: Darwin vs National over the past year (to Sept 2017) Increases in Darwin over past 12 months Automotive fuel^ 10.1% vs Australia 7.5% Medical & Hospital Services^ 5.3% vs Australia 5.4% Gas and other household fuels 5.0% vs Australia 8.2% Transport 4.4% vs Australia 2.7% Health 3.6% vs Australia 3.9% Education 2.7% vs Australia 3.1% Insurance 2.0% vs Australia 3.7% Decrease in Darwin over past 12 months Fruit 9.5% vs Australia 10.3% Audio, visual and computing equipment^ Rent 9.3% vs Australia 7.0% 6.8% vs Australia 0.5% Vegetables 6.2% vs Australia 6.5% Telecommunication & equipment & services 3.8 vs Australia 3.2% Audio, visual and computing equipment & services 2.6 % vs Australia 2.8% Source: ABS 2017e Data 4, 5, 6 Alcohol & Tobacco 5.1% vs Australia 7.0% ^Note: Automotive fuel is a sub-category of the Transport CPI Category Hospital and medical services is a sub category of the Medical Dental and hospital services CPI subcategory, which is a sub-category of the Health CPI category Audio, visual and computing equipment is a sub category of Audio, visual and computing equipment & services (which is a sub category of Recreation and Culture CPI category) 3

6 Table 1c: Significant changes in CPI categories Darwin vs National over past quarter (to Sept 2017) Increases in Darwin over past 3 months Decreases in Darwin over past 3 months Gas and other household fuels 4.2% vs Australia Recreation and Culture Fruit 3.0% vs Australia 2.7% vs Australia Vegetables 5.2% 9.2% vs Australia -10.9% Audio, visual and computing equipment 1.3% 3.8 % vs Australia 0.8% Rents 1.9% Vs Australia 1.8% 0.2% Source: ABS 2017d Data 4, 5, 6 Note major CPI categories are displayed in bold; with the sub-categories not in bold. See Appendix A for list of all CPI Categories, showing price movement in the NT and Australia for the past quarter and past year Comment: Petrol prices up again, and other price rises Darwin has again seen low growth in the overall CPI over the past 12 months (0.6%) and well under the national rate of growth (1.8%) (see Table 1a), however not all Territorian households are enjoying the benefits. It is important to take into consideration that the CPI-All Groups figure represents an average figure, which is affected by changes both up and down amongst the 11 major CPI sub-categories which together contribute to the overall CPI-All Groups figure. In the past year there have been some large price rises within some sub-categories of the 11 CPI categories, which particularly impact on low income Territorians. As Table 1b highlights, the price of automotive fuel has risen dramatically over the last year (10.1%). This represents a significant increase over the past year in the cost of living for motorists, which puts further pressure on low income households both in Darwin and across the NT (where fuel prices are generally higher). These price rises come after a sustained period of much lower fuel prices. Between the June quarter 2014-September quarter 2016, fuel prices dropped dramatically (the price dropped or stayed the same in eight out of the ten quarters in this period) (ABS 2017d, Data 5). For some time, NTCOSS has highlighted the huge disparity between fuel prices in major centres and remote areas of the NT. Customers have been paying up to twice the price paid for fuel by motorists in Darwin and Katherine (NTCOSS 2016, P.21). Other sizeable increases in CPI over the past year occurred in the price of medical and hospital services (5.3%), gas and other household fuels (5.0%). In addition, the CPI for health overall increased by 3.6% and transport by 4.4% (see Table 1b). 4

7 Where price rises occur for key expenditure items such as fuel, health services and household fuels, it is likely a greater impact on the cost of living will be felt for low income and disadvantaged households, as expenditure on these items represents a greater proportion of weekly income. There has been a decrease in price in some key expenditure areas fruit (down 9.5%) and vegetables (down 6.2%), audio, visual and computing equipment (down 9.3%) and telecommunications and equipment services over all (down 3.8%) and rent (down 6.8%), but these figures only tell part of the story. NTCOSS has highlighted over many years that the NT has some of the highest rent prices in Australia, compared with other jurisdictions. While they have dipped recently, rental prices are still high, and continue to place great strain on many lower income households. With regards to telecommunications & equipment services, prices have been steadily dropping in every quarter for the past three years but at the same time there has been an increase in usage of telecommunication services, with more data being consumed, and data download volumes increasing by 52% over the past year (ACCC 2017, p.1). As an example, while prices for mobile phone services decreased by 1.8% on average over the past year (ACCC 2017, p.96), data inclusions on mobile plans increased by a third (ACCC 2017, p.1). This means while prices have dropped, expenditure may have actually risen, due to an increase in the usage of services. The second section of this report will look at issues related to telecommunications as a cost of living pressure in more detail. Selected Living Cost Index (SLCI) for Income Support Recipients An examination of price movement for goods and services purchased by low income households is important for determining how well Australia s income support system is doing in terms of helping people to keep up with rising living costs. The ABS Selected Living Cost Index (SLCI) measures the cost of various baskets of goods which are specific to a number of different household types including Age Pension, Other Government Transfer Recipient households, Employee households and Self-funded retirees (ABS 2017a). Other government transfer recipient households includes households whose principal source of income is a government pension or benefit other than the Age Pension or veterans affairs pension, e.g. Newstart or Youth Allowance (ABS 2017c). NTCOSS is specifically focused on the cost of baskets which apply to Age Pension and Other Government Transfer Recipient households, given that it is these households which are more likely to be representative of low income and disadvantaged households. Comparisons are also made with expenditure for both Employee households and Self-Funded Retiree households. This is to get a sense of the change in the rate of changes in costs of living for low income households vs. higher income households. 5

8 Movement in the Selected Living Cost Index (SLCI) Darwin vs National figures Sept Sept 2017 Table 2a: Changes in SLCI figures over the past year (to September 2017) National CPI all groups 1.8% SLCI for Age Pensioners 1.7% which is below CPI increase SLCI for Other Government Transfer Recipients 2.1% which is above CPI increase SLCI for Employee Households 1.5% which is below CPI increase SLCI for Self-funded Retirees 1.6% which is below CPI increase Source: SLCI Figures taken from ABS 2017a and CPI figures taken from ABS 2017d Data 6 Table 2b: Changes in SLCI figures over the past quarter (to September 2017) National CPI all groups 0.6% SLCI for Age Pensioners 0.5% which is below CPI increase SLCI for Other Government Transfer Recipients 0.7% which is above CPI increase SLCI for Employee Households 0.7% which is above CPI increase SLCI for Self-funded Retirees 0.6% which is same as CPI increase Source: SLCI Figures taken from ABS 2017a and CPI figures taken from ABS 2017e Data 6 6

9 Contributing Factors to the changes in the SLCI Figures - Sept 2017 Quarter Age Pensioner Households (+0.5% increase) Contributors to the rise in SLCI Housing (+3.6%) contributed most to the rise, driven by driven by electricity due to higher wholesale prices (ABS 2017b). Alcohol and Tobacco (+2.0%) driven by tobacco due to the effects of the 12.5% federal excise tax increase effective from 1 September 2017 (ABS 2017b). Contributors to the offsetting movement Food and non-alcoholic beverages (-1.3%) helped offset the rises, as a result of falls in vegetable prices, with favourable growing conditions having led to an increase in the supply of many vegetables, having a downward impact on prices (ABS 2017b). NOTE: Age pensioner households spend a greater proportion of income on food and non-alcoholic beverages, which fell this quarter, which is why the SLCI rose less than the CPI (+0.6%) this quarter (ABS 2017b). Other Government Transfer Recipients Households (+0.7% Increase) Contributors to the rise in SLCI Housing (+2.1%) contributed to the rise, as per above (ABS 2017b). Alcohol and tobacco (+3.0%) was the area that rose most, as per above (ABS 2017b). Contributors to the offsetting movement Food and non-alcoholic beverages (-1.2%) helped offset the rise, as per above (ABS 2017b). NOTE: The larger rise in the SLCI (0.7 %) compared to the CPI (+0.6%) this quarter, is a result of a higher expenditure on housing and alcohol and tobacco, which both rose this quarter, when compared to the CPI population (ABS 2017b). Employee Households (+0.7% Increase) Contributors to the rise in SLCI Housing (+2.2%) contributed to the rise, as per above (ABS 2017b). Insurance and financial services (+1.7%) also contributed to the rise due to increases in mortgage interest charges, which are not included in the CPI (ABS 2017b). Contributors to the offsetting movement Food and non-alcoholic beverages (-0.8%) helped offset the rise, as per above (ABS 2017b).. NOTE: Employee households have a higher expenditure on insurance and financial services due to the inclusion of mortgage interest charges, which are not included in the CPI. Self-Funded Retiree Households (+0.6% Increase) Contributors to the rise in SLCI Housing (+3.4%) was the main contributor to the rise, as per above (ABS 2017b). Recreation and culture (+1.3%) also contribute to the rise, as overseas holiday travel and accommodation rose due to summer peak seasons in Europe and America (ABS 2017b). Contributors to the offsetting movement Food and non-alcoholic beverages (-1.0%) helped offset the rise, as per above (ABS 2017b). 7

10 How well are income support payments keeping up with Cost of Living changes? Where an income support payment is someone s sole source of income, being able to regularly save a substantial amount of the weekly payment is not an easy task. In Figure 1 below, the dollar value of changes in cost of living over the past year has been calculated for someone who is on the base level of payments, and assuming that they spend all their income. Figure 1: Comparison of selected Income Support Payments rates as at Sept 2016 and Sept 2017 $ $ $ $ $ $ $ $ Base Income Support Payment and Minimum Wage Rates for Sep 2016 and Sep 2017 $ $ $ $ $ $ $ $ $ $ $0.00 Age Pension, single Newstart single, no child Newstart & FTB A & B single 2 children Minimum Wage single, no child Youth Allowance single, no child Base Rate* per week 19 Sep 2016 Base Rate* per week 19 Sep 2017 Sources: Centrelink 2016 p. 2, 5, 12, 23, 26, 31, 32, 37, 38 Centrelink 2017, p. 2, 5, 13, 25, 26, 32, 33, 38, 39 Fair Work Commission, 2017 (*NB: For simplicity, Rent Assistance as well as some supplements are not included in Figure 1, as they can vary from person to person see Explanatory Note 4 for information on the calculations for each payment type used in Figures 1 and 2). 8

11 Figure 2 compares cost of living changes for households with different income sources, and the changes in income for each of these groups. Figure 2: Growth in Selected Income Support Payment rates vs Cost of Living (SLCI) over the past year (ending Sept 2017) Comparison of rate of growth of weekly Cost of Living (SLCI) vs rate of growth of weekly Base Payment and Mimimum Wage Rates b/w Sep 2016 and Sep 2017 $25 $22.20 $20 $15 $10 $5 $7.43 $7.20 $11.72 $5.63 $4.00 $4.25 $10.09 $4.62 $2.15 $0 Age Pension, single Newstart single, no child Newstart & FTB A & B single 2 children Minimum Wage single no child Youth Allowance single, no child Cost of Living (SLCI) Base Payment Rates - Difference Sources: Centrelink 2016 p. 2, 5, 12, 23, 26, 31, 32, 37 & Centrelink 2017, p. 2, 5, 13, 25, 26, 32, 33, 38, 39 ABS 2017a, Fair Work Commission, Note: The rate of growth of the SLCI is calculated by multiplying the Sept 2016 base payment rate by the percentage increase in the SLCI over the past year for the relevant payment type As Figure 2 shows, the rise in cost of living for a single pensioner has risen almost on par with the rise in the pension over the past year, rising just $0.23 above the rate of cost of living for a single pensioner. For single Newstart (single) recipients without children, the rise in the cost of living has outstripped the rise in payments by $1.63 per week. For single Newstart recipients with two children, the difference was $7.47 per week ($390 per year). For single Youth Allowance recipients, the rise in the cost of living has outstripped the rise in payments by $2.47 per week ($129 per year) over the past year. In comparison, for a single person (no children) on the minimum wage, the rise in cost of living was $12.11 per week below the rise in the minimum wage, over the past year, meaning the minimum wage was more than keeping up with cost of living rises for these employees. For recipients of Newstart and Youth Allowance, the lag is of particular concern, given that the existing inadequate base rate of payment (if it is the sole payment received). It is critical therefore that the Commonwealth Government addresses these low rates of base payments. 9

12 Struggling on Newstart and Youth Allowance Living on $ per week on Youth Allowance or $ on Newstart means there is very little room for affording discretionary or luxury expenditure items. Housing, food, transport, health and utilities bills all have to be squeezed into a very small payment which, as at Sept 2017, was around $420-$470 under the Minimum Wage 1 of $ per week (Fair Work Commission, 2017). Where there are unexpected bills like medical bills or a larger than expected electricity bill, some other essential items might have to be forgone (e.g. paying for car repairs, or spending less money on food) in order to meet urgent payments. Research by the University of New South Wales (UNSW) Sydney has highlighted that The Newstart Allowance received by people looking for work falls well below the minimum income required to achieve a basic standard of living defined as a budget standard (ACOSS 2017, p.1), by $96 a week for a single person, $58 a week for a couple with one child and $126 a week for a couple with two children (ACOSS 2017, p.1). The UNSW report (New Budget Standards for Low-Paid and Unemployed Australians Report) reveals the shocking inadequacy of income support for the wide range of household types, as follows; Sole parent, one child - $47 per week below the budget standard. Couple, one child - $58 per week below Single adult - $96 per week below Couple, with children - $126 a week below Couple, without children - $107 per week below (ACOSS 2017). The report has suggested, in order to maintain an adequate level of payment, which factors in changes in circumstances, that consideration be given to the implementation of a mechanism similar to the minimum wage, set independently from Government, rather than the current situation where the level of the Newstart payment is set at the discretion of the government. (ACOSS 2017). ACOSS has again called on the Federal Government to provide an increase to Newstart to help alleviate the dire levels of poverty being seen as a result of the failure to increase the basic rate of working-age social security payments in more than 20 years (ACOSS 2017, p.1). NTCOSS again echoes this call and urges the Federal Government to increase the Newstart Allowance and other base level payments by $50 per week, as a matter of urgency. 1 NOTE: The Minimum Wage figure referred to of $ is for a 38 hour week (before tax) and is the minimum wage for the period 1 July June

13 Who is on Newstart Allowance? People with Disability As of June 2017, there were approximately 733,000 people receiving the Newstart Allowance across Australia (Australian Government 2017a). These figures must be contrasted with the total job vacancies in Australia which were 201,300 in August 2017 (ABS 2017f). Around a quarter of Newstart recipients are people with a significant disability, according to administrative data from the Department of Human Services, reported by Karvelas (2014). This data revealed that in March 2014, there were 173,060 Newstart Allowance recipients with a disability and 24.9 per cent were receiving support from a Disability Employment Service or had a partial capacity to work (Karvelas 2014). Based on current figures, it means that around 183,000 people currently on the Newstart Allowance, as of June 2017, have a disability. Government data reveals that 170,566 people on Newstart had only a partial capacity work (i.e. less than 29 hours per week), as of June 2017 (Australian Government 2017b). In addition, a further 11,200 people on Parenting Payment Single (Activity tested), and Youth Allowance (other) were also assessed as having only a partial capacity to work. For people with a disability on Newstart who fall in the partial capacity to work category, it means that they have to apply for five jobs a week in which they would be expected to work up to 15 hours (Jabour 2015). Some job seekers have more than one disability. In 2014 there were more than 100,000 job seekers who had physical disabilities affecting their limbs, shoulders and upper arms, spine and another musculo-skeletal disorders, according to Department of Human Services data reported by Karvelas (2014). Such physical disabilities have profound impacts on people s ability to work, creating significant limitations on people s ability to lift objects stand for long periods of time, as well as their capacity to walk over a long distance. Other common disabilities included hypertension, which affected 12,410 job seekers, and circulatory system problems, which was a serious problem for 10,365 people on Newstart according to Department of Human Services data highlighted by Karvelas (2014). The former Labor government began tightening eligibility for the Disability Support Pension (DSP) in 2011, which included new rules forcing people on the DSP to look for work and take part in certain activities or lose their payment (Jabour 2015). People with Mental Illness People with mental illnesses were particularly affected by the tightening of eligibility for the DSP, which included new rules forcing people on the DSP to look for work and take part in certain activities or lose their payment (Jabour 2015). 11

14 Karvelas (2014) highlighted Department of Human Services data which showed that there were more than 72,000 job seekers nationally who experienced depression or were dealing with psychiatric/psychological disorders or coping with anxiety. Sole Parents Another group of people who make up a significant proportion of people receiving the Newstart Allowance are sole parents. In January 2013, the then-labor government moved almost 100,000 parents from the Parenting Payment to the general unemployment benefit Newstart (ABC 2014). The change introduced means that eligibility for Parenting Payment (single) is based on a sole parent having a child in their care under eight years of age, after which a sole parent will be shifted onto the Newstart Allowance, which pays a base rate around $85 under the base rate of the Parenting Payment (single) (Centrelink 2017, p.11,27). People aged between In 2014, it was estimate that there were 140,000 unemployed Australians aged between 50 and 64 receiving the Newstart allowance from Centrelink (ABC 2013). Long Term Unemployed More than seven out of 10 Australians (over 538,000 people) on unemployment benefits have been out of work for more than a year, as at 2015 (Martin 2017). Newstart Allowance recipients in the Northern Territory As of June 2017, there were 13,816 people receiving the Newstart Allowance, and 2407 people receiving the Youth Allowance (including 380 students/apprentices). (Australian Government 2017a). Pension Indexation System and Inadequacy of Indexation for Allowance Payments The previous figures shown reinforce the importance of the current method of indexation for adjusting pension rates every six months, where payment increases are linked to Male Total Average Weekly Earnings and prices (CPI). This generally ensures that pensioners do not drop behind society averages (See Explanatory Note 3), though over the past year the pension did marginally lag behind the rise in the SLCI. NB: Disability Support Pension rate is identical to the Age Pension rate, but for simplicity reference is made to the Age Pension in this report. Newstart, Youth Allowance and other base level benefit allowances are indexed to the CPI only, which does not ensure that increases in allowances will always keep up with the cost of living, as described above, and evident in Figure 2. At the moment, the Newstart Allowance is almost $172 per week lower than the age pension. $38 a day is simply not enough for an individual to live on. 12

15 SECTION 2 Telecommunications Telecommunications: Summary of Key Issues An increasing range of telecommunications equipment and services are now available to consumers including products like mobile phones, lap top computers, desk top computers, ipads, mobile broadband devices and landline telephones. In addition, there are services such as mobile phone plans (both prepaid and post-paid), internet service packages, as well as bundled packages, encompassing mobile, landline and internet services. Access to these telecommunications products and services is critical for individuals and families across the Northern Territory in order to be connected to family, schools, work and services such as government and medical and to be able to be a full participant in society. There has been an increased move towards a range of government services being online, with face-to-face services decreasing, making access to some services much more difficult without access to internet, data or mobile phones. There appears to be an increasing expectation that all people have instant access to the internet which may not be possible for all; as well as increased pressure to have a phone or other device with data that will allow downloading of documents (MyGov letters for example) so that people can receive information. Households in the Northern Territory have the highest weekly expenditure on telecommunications in the country at $65 per week ($12 above the national average). Households in Darwin spend the most per week on mobile telephones and internet charges - compared with the other capital cities. Households in the NT have the highest weekly expenditure on telecommunications nationally ($65 per week, $12 above the national average), though the NT is ranked 5 th amongst all the states and Territories in terms of telecommunications as a proportion of weekly expenditure, due to the NT also having the highest wages in the country. In Darwin households spend the most per week on mobile telephone and internet charges, both in terms of expenditure and as a proportion of disposable income, out of all capital cities. Affordability for telecommunications equipment and services is a very real issue. Many people in the NT cannot afford the more advanced types of devices (e.g. smart phones) and only have a basic phone service, and as a result have to rely on friends, family or service organisations to be able to access the internet or data. People without supportive networks, however, may miss out which can further increase their vulnerability. Low income households also spend proportionately more on basic services than higher income households. Technology is constantly changing and the need to update or be left behind adds another financial pressure. It has been well documented that there is a digital divide in Australia, and with it comes the risk of deepening social, economic, and cultural inequalities. 13

16 As digital technologies become ever-more central to public and private life, the disadvantages of not being connected increase (Thomas et al, 2016, p.4). Telecommunications prices have gone down over the last two decades across Australia (with Darwin being no exception). Over the last 20 years both the CPI for telecommunications has decreased significantly, while the overall CPI for Darwin has risen. At the same time, the usage of telecommunication devices and services has risen dramatically. Despite prices being lower, with usage having risen, households are still outlaying significant amounts of money on telecommunication products and services. Calculations on 2015/16 Household Expenditure Survey (HES) figures show that overall there has been an average of $22 real increase in expenditure on telecommunications equipment and services across the country, since the 1998/99 HES. Interestingly however, since the 2009/10 HES there has a been decrease in real terms by around $4.30 per week nationally and around $7.00 in the NT (see Tables 6a and 6b below). It is people on the lowest incomes however, who are of primary concern to NTCOSS, in particular pensioners and other social security recipients, those renting (particularly from state housing) and lone person households, as low income earners tend to spend less overall on telecommunication (resulting in access to fewer services, and therefore more at risk of digital exclusion). At the same time, they also spend but a greater proportion of their income on telecommunications than other households. Low income consumers also often face a poverty premium (additional costs and charges imposed as a result of people s poverty) on their mobile phone plans, especially if using a prepaid mobile. While there is Telephone Allowance (TAL) paid through Centrelink for certain income support recipients, the TAL was historically set up to assist with the maintenance of a telephone service, and not call costs. It is a very low amount and is poorly targeted, and reform is required to ensure that its purpose and payment rate reflect today s realities. There is other data that reinforces concerns for low income and vulnerable groups across the board, particularly the Australian Digital Inclusion Index. While overall the NT appears on face value to be doing relatively well in terms of digital inclusion, when compared with the other states and territories, a small survey sample size masks the reality of digital inclusion across the NT, making it difficult to draw firm conclusions about who may be missing out in the NT. In addition, particularly as the ADII for the NT data does include remote Aboriginal populations. 14

17 While the affordability sub-indice in the NT has improved between 2014 and 2017, and particularity over the last year, this cannot be seen as representative of the overall population. National ADII figures highlight a number of population sub groups for whom lower rates of digital inclusion is an issue, with affordability being a particular issue for many of these groups, who are represented across the NT population, e.g.: Low income households People with disability Aboriginal and/or Torres Strait Islander people Older Australians People with a language other than English People in rural areas Mobile only users People with low education levels, and unemployed people (Thomas et al, 2017 pp 5-6, 11-16) Telecommunications: A Critical Expenditure Area Access to a range of telecommunication products and services is critical for people to be connected to family, schools, work and services such as government and medical and for full participation in society/social inclusion. SACOSS (2015, pp. 3-4) describe telecommunications services as being essential, significant and regressive. Essential: Telecommunications products and services are becoming an increasingly necessary component of daily life that require ongoing financial outlays to both obtain, maintain and upgrade as changes to technology occur, and service delivery methods change, as outlined in further detail in the Telecommunications Overview (p.7 above). Technology is required to perform a multitude of daily tasks such as banking, shopping, liaising with Government departments and for educational purposes. Not having access to either the right technology, or sufficient data, can significantly hamper one s ability to function and participate in society. The study by Saunders and Wong (2012, p. 34), revealed that there was a significant rise in the number of people who indicated that a home computer, mobile phone, and access to the internet at home as essential items between 2006 and Significant: Telecommunications expenditure as a proportion of disposable household income represents less than 3% of household expenditure (Productivity Commission 2016, p. 14). The Productivity Commission describes this as being relatively small, however it is comparably greater than household expenditure on electricity, recently estimated as 2.7% nationally (Phillips 2016, p. 4, 5) and only 2.1% for a combined ACT/NT figure. 15

18 Given that electricity is widely accepted as a significant household expenditure item, which often comes in large bills (accompanied by bill shock ) and can cause significant hardship for some households to manage, telecommunications expenditure similarly can lead to bill shock (SACOSS 2015, p.11) and clearly represents a significant household expenditure item. As a comparison, data compiled by NTCOSS using the ABS Household Expenditure Survey showed that on average, households nationally spent 3.1% on average of their disposable household income on telecommunications services and equipment. The lowest income quintile households, however spent 5.8% and the highest only 2.1 %. It is important to examine not just at the average national figure, but also what telecommunication expenditure means for lower income households as telecommunications bills are regressive. Regressive: As described by ACCAN (2016, p. 5) telecommunications costs are regressive, meaning that lower-income households spend a higher percentage of their income than higher-income households. With respect to fixed broadband services in Australia, expenditure is on average 0.83% of disposable income, but for those in the lowest 20% of disposable income category it is 2.29%. Mobile broadband follows a similar trend, with expenditure on average being 0.3% of disposable income; while the lowest 20% income groups spend nearly six times more of their disposable income on mobile broadband than the highest 20% income groups (ACCAN 2016, p.7). 16

19 2015/16 Household Expenditure Survey (HES) - Telecommunications Expenditure The following table shows weekly expenditure levels for all telecommunications items (equipment and services) for Darwin, the Northern Territory, and the country as a whole. Table 3: Telecommunications Ave. Weekly Expenditure Darwin & NT vs National 2015/16 Darwin Ave Weekly Expenditure NT Ave Weekly Expenditure Australia All Households Ave Weekly Expenditure Telecommunications Hardware Communication Equipment $3.17* $3.82* $3.21 Mobile Phones $2.70** $3.17* $3.00 Telephone handset (purchase) $0.03** $0.02** $0.06** Answering machines $0.00 $0.00 $0.00 Modems (separate purchase) $0.58** $0.70** $0.06* Smart watches and wearable technology $0.00 $0.00 $0.02** Home computer equipment (including pre-packaged $9.37 $12.69* $6.93 software) Repair and maintenance of audio-visual equipment & $0.31** $0.31* $0.53 personal computers SUB TOTAL Telecommunications Hardware $12.85 $16.82 $10.67 Telecommunication Services Telephone and facsimile charges $36.34 $37.45 $35.69 Fixed telephone account $9.13 $9.80 $14.02 Mobile telephone account $20.30 $19.85 $17.24 Public telephone call (not account) $0.00 $0.00 $0.01** Mobile Phone charges (not account) $4.02 $4.61 $2.24 Telephone and facsimile charges nec $2.61 $3.05 $2.03 Internet charges $11.30 $11.02 $6.47 Internet charges (account) $10.91 $10.62 $5.97 Internet charges (not account) $0.17** $0.55* $0.48 SUB TOTAL Telecommunications Services $47.44 $48.47 $42.16 TOTAL ALL TELECOMMUNICATIONS EXPENDITURE $60.29 $65.29 $52.83 ALL TELECOMMS EXPENDITURE AS % OF TOTAL GOODS & 3.66% 3.84% 3.71% SERVICES EXPENDITURE TOTAL GOODS AND SERVICES EXPENDITURE $ $ $ Source: ABS 2017g, Table 13.3A, 13.9A 17

20 Expenditure $ The specific sub categories of expenditure areas that are driving these differences are Home computer equipment, where the NT expenditure is nearly double (1.83x) the national averaege and expenditure in Darwin is around 1.35 x the national average. Internet charges, where the NT expenditure is 1.70x the national averaege and expenditure in Darwin is around 1.75 x the national average. The only sub category where the NT and Darwin were significantly lower than the national average, was in relation to expenditure on Fixed telephone accounts which may reflect the overall younger average population in the NT, more likely to have a mobile phone than a landline, as well as the relativly limited number of landlines in remote Aboriginal communities. NT households top the list of weekly expenditure on telecommunications As Table 3 above and Figure 3 below show, the Northern Territory has the highest level of expenditure on telecommunications in the country. In addition, the Darwin weekly expenditure figure (not shown here) is very similar in most of the sub categories, and is higher than the national capitals average. Figure 3: Weekly Household Expenditure on Telecommunications States and Territories 2015/ National Comparison 2015/16 Telecommunications Weekly Household Expenditure $ $55 $53 $53 $47 $51 $44 $65 $53 $ NSW VIC QLD SA WA TAS NT ACT AUST Source: ABS 2017g, Table 13.9A 18

21 Weekly Expenditure $ Percentage Figure 4 Telecommunications as a proportion of Weekly Household Disposable Income National Comparison National Comparison 2015/16 Telecommunications as % of Weekly Household Disposable Income 4.0% 3.0% 2.0% 1.0% 0.0% 3.0% 3.2% 3.3% 3.2% 2.9% 3.3% 3.1% 2.7% 3.1% NSW VIC QLD SA WA TAS NT ACT AUST Source: ABS (2017g) Table 13.8A, 13.9A In terms of the proportion of disposable income spent on telecommunications, the NT is ranked 5 th amonst all the states and Territories. This is reflective of the NT having the highest disposable income in the country ($2073 per week, well above the national average of $1706) but the NT also has sigificant pockets of low income households who face poverty and disadvantage who may be spending a far greater proprotion of their income on telecommunications, as will be examined in further detail below. Darwin households top the list of weekly expenditure on mobile telephones and internet charges Darwin households have the highest expenditure on both mobile telephones and internet services amongst all of the capital cities across the country (see Figures 5 and 6). Darwin households also spend the greatest proportion of income in these areas, compared with the other capital cities, as shown in the figures below. Figure 5: Weekly Household Expenditure on Mobile Telephone charges* Capital Cities 2015/16 Darwin vs Capital Cities 2015/16 Mobile Telephone charges Weekly Expenditure $30 $25 $20 $15 $10 $5 $ Source: ABS 2017g, Table 13.3A *This does not include costs in purchasing a mobile phone itself 19

22 Weekly Expenditure Percentage Darwin households spend more than $4 per week above the national average expenditure on mobile telephones, which equates to more than $210 per year than the national average. In addition, Darwin households spent a second most in the country (marginally behind Sydney) as a proportion of weekly disposable income on mobile phone services, and higher than the national average. Figure 6: Weekly Household Expenditure on Mobile Telephone charges* as a proportion of Weekly Disposable Household Income Capital Cities 2015/16 Darwin vs Capital Cities 2015/16 Mobile Telephone charges as % of Weekly Household Disposable Income 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1.00% 1.19% 1.09% 1.25% 1.07% 1.09% 1.20% 1.11% 1.10% Source: ABS 2017g, Table 13.2A, 13.3A *This does not include costs in purchasing a mobile phone itself Figure 5: Weekly Household Expenditure on Internet Charges Capital Cities 2015/16 Darwin vs All Capital Cities 2015/16 Internet Charges Weekly Expenditure $ $10 $8 $ $4 $2 $0 Source: ABS 2017g, Table 13.3A 20

23 Percentage Darwin households spend around $4.50 per week more than the national average on internet charges, which equates to more than $230 per year than the national average. In addition, Darwin households had the highest proportion of weekly expenditure on mobile phone services, much higher than major cities like Sydney, Melbourne and Brisbane as well the national average. Figure 6: Weekly Household Expenditure on Internet Charges as a proportion of Weekly Disposable Household Income Capital Cities 2015/16 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% Darwin vs Capital Cities 2015/16 Internet Charges as % of Weekly Household Disposable Income 0.33% 0.35% 0.34% 0.51% 0.40% 0.42% 0.56% 0.49% 0.36% Source: ABS 2017g, Table 13.2A, 13.3A The shift to Online and Digital Services It is becoming essential for people to be connected to at least one device, if not more, with the shift of many services to online servicing as their first preference, especially government services. In 2015, the Commonwealth Minister for Communications stated that the Commonwealth Government s Digital Transformation Agenda seeks to ensure that all new and redesigned government services can be completed from start to finish online (Minister for Communications 2015, cited in Ogle and Musolino 2016, p.10). In 2016, SACOSS commissioned Mint Research to conduct a survey of over 500 Centrelink recipients and Low Income Health Care Card holders from across the country, to form part of report that ACCAN commissioned SACOSS to do (Ogle & Musolino 2016, p.6). Based on the survey sample population from the research undertaken by Mint Research, Ogle & Musolino (2016, p. 14), highlight the broad societal shifts to mobile and digital technology are just as significant for those on low incomes as for the rest of the population. Ogle & Musolino (2016, p. 9) reported that 68% of respondents usually accessed government services online while 26% said they usually accessed government services by phone. 21

24 This increased move towards online services has also brought with it a diminished access to face-to-face services which makes accessing some services much more difficult without access to internet, data or mobile phones. There appears to be an increasing expectation that all people have instant access to the internet but this may not be possible for everyone. Internet Use data from the ABS shows that the volume of data downloaded nationally has increased over 20 times since the previous HES was done in 2009/10 (ABS 2016a, Volume of data downloaded page). Within the context of the increased usage of telecommunication devices the issue of affordability is critical. Affordability of telecommunications products and services is a very real issue for lower income households, particularly with changing technology necessitating people update their devices, or be left behind. There is a sense of increased pressure to have a phone or other device with data that will enable the receipt and downloading of documents (this can be the case with MyGov letters for example). For people without access to the internet at home, nor access to a smart mobile phone with data (or constant data), they may have to rely on friends or social services to access services online or to print documents. People without such supports may slip through the safety net, and may find themselves unable to respond to requests for information from government departments such as Centrelink which could lead to them missing an appointment and possibly being breached and subsequently having payments suspended or cut. Telecommunications products and services also typically take up proportionally more of a low income household s budget than for a higher income household, as the next section highlights. The Regressive Nature of Telecommunications Expenditure The regressive nature of telecommunications expenditure is evident from data from the 2015/16 ABS Household Expenditure Survey (HES), which shows that lower income households spend proportionately more of their income on telecommunications, than do higher income households. This is driven primarily by recurrent costs, rather than capital costs, where their proportion of expenditure is the lowest out of all the income quintiles. As Figure 7 shows, telecommunications expenditure as a proportion of household disposable income declines with each higher quintile income level, with this pattern of decline being consistent across both capital (equipment), and recurrent (service charges). The lowest income quintile group spends nearly 3x as much on telecommunications, as a proportion of disposable (gross) income (6.2%), when compared with the highest income quintile (2.2%) (ABS 2017g). 22

25 % of Disposable Income Figure 7: Telecommunication as a proportion of weekly disposable Income, by income Quintiles, National Figures, 2015/16 Telecommunications as a % of Weekly Household Disposable Income, by Income Quintiles 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Lowest Second Third Fourth Highest All households Capital Costs Recurrent Costs Source: Derived from ABS 2017g, Table 4.2A, 4.3A Note: The exact % amounts for each Quintile from lowest to highest is: 6.2%; 4.3%; 3.7%; 3.1%; 2.2% (3.1% All households) Given the overall decreases in expenditure nationally and across the NT over the last six years, expenditure on telecommunications has decreased as a proportion of household expenditure on goods and services, declining (nationally) for households overall from 4.0% to 3.7%. For the lowest income quintile households, however, telecommunications expenditure in real terms and telecommunications share of household expenditure have increased slightly (SACOSS 2017b, p.1, using data from ABS 2011b and 2017g ). In addition, the HEs data reveals that lone person households, pensioners and other social security recipients, and those renting (particularly from state housing authorities): spend significantly less on telecommunications - and are therefore likely to be more digitally excluded, but spend proportionately more of their income on telecommunications than other households (in SACOSS 22017b, p. 1 (using data from ABS 2017g). With increased pressure to access more data or update devices, for households on a limited income, expenditure on telecommunications has to be juggled with other essential costs such as rent, food, other utilities, transport costs, medical, and other basic household costs. With little or no funds available for discretionary spending, people often have to make difficult choices about what they can afford, compromising one need (e.g. healthy food) for another, particularly if unanticipated expenses occur (e.g. expensive car repairs). When people are unable to meet payment deadlines to a creditor, this can lead to further financial difficulties, with the risk of being pursued by a debt collection agency. While lower income households spend proportionately more on telecommunications than higher income households, SACOSS (2013, p. 4) have pointed out that despite this they (especially the lowest income quintile) households have cheaper/lower standard equipment. 23